DOLLAR: Despite news that Moody’s might have given Greece a decent shake on their Fiscal program overnight, the Dollar has managed to claw higher on the day. With the JAL bankruptcy overnight and a softer than expected German ZEW reading released overnight, it is possible that the US Dollar was seeing some macro economic differential buying, but that type of buying should have been checked by the news of more Chinese and Taiwanese tightening efforts. In looking ahead, the macro economic news flow is expected to be thin until Wednesday and Thursday and that could reduce the breadth of the daily trading range in the Dollar today. While the January 12th Commitment of Traders with Options report for US Dollar showed the Non-commercial position to be net long 33,550 contracts, with the Non-reportable position net long 2,887 contracts, that made the “combined” spec and fund position net long 36,437 contracts as of early last week. However, with the Dollar sitting marginally higher, than the level where the COT report was marked off, it is possible that the length of the Dollar positioning has become inflated somewhat. We see a critical pivot point in the March Dollar Index up at the 77.66 level and a move back above that level could project a near term rise to even numbers of 78.00. We think that a lack of up beat macro economic news from the Euro zone and also from the US will generally leave the Dollar with a slight edge.

EURO: With a downward bias in the March Euro early this morning it would appear that the bearish bias from late last week remains in force into the opening today. While the January 12th Commitment of Traders with Options report for Euro showed the Non-commercial position to be net short 15,925 contracts, with the Non-reportable position net long 4,837 contracts, that made the “combined” spec and fund position net short only 11,088 contracts as of early last week. Therefore, the Euro might be building a larger net short positioning, but that positioning isn’t extreme enough to take the negative bias away from the Euro. In fact, the macro economic and geopolitical news from the Euro zone recently has been disappointing and that should leave the March Euro in a position to fall down to the 1.4250 level. In fact, in the face of mostly discouraging global economic news, a low of 1.4215 could be seen this week.

YEN: The Yen is showing some signs of short covering and perhaps even some temporary outright buying. In fact, with a series of currencies losing their bid overnight, the fear of Chinese tightening and a Bankruptcy at JAL announced that could give the carry traders a fresh measure of confidence. In our view, one can’t rule out a temporary trading range of 111 to 110.00 in the March Yen early this week, but in the wake of the slightest improvement in numbers, we would suggest that traders look to add to shorts or continue to acquire long dated out of the money Yen put options.

SWISS: Like the Euro, the Swiss is clearly disappointed with the pace of the global recovery effort. With many global equity markets seemingly in a negative bias, it is likely that the trade will continue to pressure the March Swiss down toward the next consolidation support zone of 96.37. The Swiss bulls need something positive from the IBM earnings and or from the scheduled US economic readings, in order to throw off the modest downward bias that is in place.

POUND: With a massive range up breakout on the Charts, it would appear that the Pound is poised to win by default. Perhaps some very hot annualized inflation readings from the UK overnight have provided the Pound with its edge today but the lack of competition is perhaps the biggest element in the Pound bull’s camp. In fact, with little in the way of alternative leadership today, the March Pound could easily see a rise back above the 1.65 level in the coming two trading sessions.

CANADIAN DOLLAR: With the Swiss and Euro out of favor and the Dollar only showing moderate interest this morning, the Canadian is somewhat locked in place. However, one might have expected the Canadian to be under some pressure in the wake of the slackening global macro economic outlook, unless of course the trade sees the Chinese tightening moves, as a sign that the Chinese economy is strong enough, that the central bank is endeavoring to begin the battle against inflation. The March Canadian has close in support at 96.88 and we see no reason for that level to fail, unless global equity markets come under more definitive selling pressure ahead.

TODAY’S MARKET IDEAS: The only clear leadership markets are the Pound and the Dollar.

This content originated from - The Hightower Report.